Purpose. This chapter establishes the policy and procedures to ensure Indian Health Service (IHS) compliance with regulations and policies of the Department of Health and Human Services and the Office of Personnel Management regulations under “Recruitment, Relocation and Retention (3Rs) Incentives,” Code of Federal Regulations (CFR), Title 5, Parts 530 and 575, Vol. 72, No. 231, dated Monday, December 3, 2007.

Policy. It is the policy of the IHS to use recruitment, relocation, and retention incentives to improve its competitiveness in recruiting and maintaining a high quality workforce.

Coverage and Exclusions.

Coverage. The following types of employees appointed or placed in the following categories of positions are eligible to receive recruitment, relocation, and retention incentives: General Schedule (GS); Senior Executive Service (SES); Executive Schedule; prevailing rate position; or any other position in a category for which payment of an incentive has been approved by OPM at the request of the head of the employing agency.

Exclusions. The following types of employees are excluded from receiving recruitment, relocation, and retention incentives: Presidential appointees; noncareer appointees in the SES; those in positions excepted from the competitive service by reason of their confidential, policy-determining, policy-making or policy-advocating character; members of the United States Public Health Service Commissioned Corps; agency heads; or those expected to receive an appointment as an agency head (i.e., those appointed to other positions in anticipation of subsequent approval to be appointed as the agency head).

Definitions.

Recruitment, Relocation, and Retention Incentives Report. Periodic reports regarding usage of 3Rs incentives as well as the annual 3Rs report to the Department or OPM.

Aggregate Pay Limitations. For GS employees, payment of these incentives is subject to the aggregate limitation on pay in a calendar year, which may not exceed the rate of pay of Level I of the Executive Schedule. For SES employees, payment of these incentives is subject to the aggregate limitation on pay in a calendar year, which may not exceed the rate payable to the Vice President at the end of the calendar year. (Note: SES employees are currently limited to the aggregate limitation on pay in a calendar year, which may not exceed Level I of the Executive Schedule rate of pay, pending certification of the SES performance appraisal system by the OPM.)

Authorized Agency Official. All officials who have been delegated authority in writing to approve these incentives are considered Authorized Agency Officials (AAOs) for the purpose of this policy (see Manual Exhibit 7-8-C). The IHS Director has delegated authority to all IHS Area Directors and IHS Headquarters Office Directors to approve individual recruitment and relocation bonuses, and retention allowances of up to 25 percent of the base pay for eligible employees. The AAO must be at the SES or equivalent level.

Rate of Basic Pay. The rate of pay fixed by law or administrative action for the position to which an employee will be appointed, before deductions and including any special rate or locality payment. This does not include pay of any other kind such as night or environmental differentials. Incentive payments are not considered part of basic pay.

Recruitment Incentive. An incentive paid to a newly appointed employee if it has been determined that the position is critical to the mission of the organization and is likely to be difficult to fill in the absence of such an incentive.

Relocation Incentive. An incentive paid to a current Federal employee who must relocate to accept a position in a different geographic area if it has been determined that the position is critical to the mission of the organization and is likely to be difficult to fill in the absence of such an incentive.

Note: While relocation incentives are payable only to current Federal employees, entitlements or relocation allowances or "expenses" may be paid to current or newly appointed employees in accordance with General Services Administration, "Relocation Allowances," Federal Travel Regulation, chapter 302.

Retention Incentive. An incentive paid to retain a current Federal employee if his or her unique qualifications or services are essential and the employee would likely leave the Federal service in the absence of a retention incentive.

An incentive is also allowable to retain an employee or group of employees when a general or specific notice of closure or relocation has been announced and they are essential to retain for mission requirements of the organization and are likely to leave for a different position in the Federal service in the absence of a retention incentive.

Service Agreement. A written agreement that must be signed by an IHS employee prior to receiving an incentive pay that requires completion of a specified period of employment service with the IHS.

Service Period. The period of service required by the service agreement may not be less than 6 months and may not exceed 4 years. Service periods begin on the first day of a pay period and end on the last day of a pay period. (Note: A service agreement is not required for biweekly retention incentive payments.)

7-8.2 RESPONSIBILITIES

The following officials and components will be responsible for administering the 3Rs policy in accordance with the appropriate statutes and regulations.

Director, Office of Management Services. The Director, Office of Management Services (OMS), is administratively responsible for the following:

Providing oversight regarding whether or not an employee meets the statutory requirements for receiving a recruitment, relocation, or retention incentive.

Ensuring that all Agency Authorized Officials (AAO) have a written delegation of authority to approve an incentive.

Documenting the criteria for an incentive payment amount, a payment method, a required service period, or a service agreement.

Ensuring that the length of service agreements for employees are applied consistently.

Director, Division of Human Resources. The Director, Division of Human Resources (DHR), is responsible for the following:

Updating and maintaining this chapter.

Ensuring that incentive payments are consistent with policy requirements.

Establishing and maintaining documentation and records containing the justification and service agreement, if applicable, for each payment issued and making such documentation available for review and analysis upon request by the Department or OPM.

Ensuring compliance with regulatory and policy requirements prior to processing the request for incentive payment.

Submitting all required incentive authorization and payment documentation to the Regional Human Resource Offices in order to ensure regulatory and policy requirements are met prior to providing incentive payment.

Establishing and maintaining documentation and records containing the justification and service agreement, if applicable, for each issuance of an incentive payment and making such documentation available for review and analysis upon request by IHS, the Department, or OPM.

Ensuring compliance with regulatory and policy requirements prior to processing the request for incentive payment.

Office Directors and Area Directors. The Office Directors and Area Directors are responsible for the following:

Approving individual relocation bonuses of up to 25 percent of base pay when necessary to accomplish the following:

Match a competing, non-Federal salary offer for a similar position.

Compensate for cost-of-living disparity.

Approving individual recruitment incentives of up to 25 percent of the base pay when necessary to accomplish the following:

Match current non-Federal salary.

Match a competing, non-Federal salary for a similar position.

Compensate for cost-of-living disparity or a combination of cost-of-living and salary offer disparity.

Approving an initial retention allowance of up to 25 percent of base pay when necessary to match a competing, non-Federal salary for a similar position.

Approving renewals of retention allowances.

Approving all requests to waive the pro rata amount of recruitment/relocation bonuses for employees who fail to complete agreements, when a waiver is required.

7-8.3 RECRUITMENT INCENTIVE

Recruitment Incentive. A recruitment incentive may be paid to a newly appointed employee following a determination that the employee’s position is critical to the organization's mission and is likely to be difficult to fill in the absence of an incentive.

A newly appointed employee is one of the following:

An employee appointed to the Federal government for the first time.

An employee appointed 90 days or more after his or her previous Federal appointment.

An employee whose previous Federal appointment was time limited or nonpermanent in the competitive or excepted service, or who was employed in the Washington, D.C., government on or after October 1, 1987.

An employee who is appointed as an expert or consultant according to 5 U.S. Code 3109 and 5 CFR Part 304.

An employee who is appointed as a nonappropriated fund employee.

An employee who is appointed provisionally.

Recruitment incentives may be approved by an AAO. However, the AAO must be one level above the recommending official unless there is no official at a higher level in the IHS Area or Headquarters

The employee must sign an agreement to fulfill a period of service with the IHS of not less than 6 months and not more than 4 years before an incentive may be paid.

Payment of recruitment incentives may not be made retroactively, that is, prior to the effective date of the service agreement signed by management officials and the employee.

Recruitment incentives may be paid as an initial lump-sum payment at the beginning of the service period, in installments throughout the service period, as a final lump sum payment upon completion of the service period, or in a combination of these methods.

Recruitment incentives may be approved for an individual not yet employed who has received an offer of employment and signed a written service agreement.

The determination to pay a recruitment incentive must be made and approved in writing by the appropriate management official before the prospective employee enters on duty in the position for which he or she has been recruited.

If OPM has granted Direct-Hire authority based on a “critical hiring need,” the group of positions that must be filled is automatically deemed hard to fill.

The following should be considered when documenting that a position is deemed hard to fill:

The success of recent efforts to recruit candidates for similar positions using indicators such as offer acceptance rates, the proportion of positions filled, and the length of time required to fill similar positions;

Recent turnover in similar positions;

Employment trends and labor-market factors that may affect the ability to recruit candidates for similar positions;

Special or unique competencies required for the position;

Efforts to use non-pay authorities, such as special training and work scheduling flexibilities, to resolve difficulties alone or in combination with a recruitment incentive;

The geographic location of the position or the desirability of the duties, work, or organizational environment.

Factors in Determining the Amount of a Recruitment Incentive.

Recruitment incentives may not exceed 25 percent of the employee’s annual rate of basic pay in effect at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period, not to exceed 4 years. For example, if an employee is paid 25 percent for 3 years, the total incentive would amount to 75 percent of his or her annual rate of basic pay at the beginning of the service period.

Use one or more of the following criteria to determine the amount of the recruitment incentive:

The current non-Federal salary or salary plus fringe benefits that the candidate receives.

The projected cost of a renewed recruitment effort if the candidate does not accept the position.

The urgency of the public health program, HHS strategic plan, or Congressional priority.

The individual’s specialized skills that will benefit the organization and that are in addition to the basic position requirements.

7-8.4 RELOCATION INCENTIVE

Relocation Incentive. A relocation incentive may be paid to a current Federal employee who must relocate to a different geographic area to accept a position that is critical to the mission of the organization and that is likely to be difficult to fill in the absence of such an incentive. (See 7-8.4A(9) below)

Relocation incentives may be approved by an AAO. However, the AAO must be one level above the recommending official unless there is no official at a higher level than the recommending official in the IHS Area or Headquarters.

The appropriate official makes the determination to pay a relocation incentive and must approve it in writing before the prospective employee enters on duty for the relocated position.

An employee accepting a relocation incentive must sign an agreement for no more than 4 years.

Payment of relocation incentives may not be made retroactively, that is, prior to the effective date of the service agreement signed by management officials and the employee.

A relocation incentive may be paid only when the employee’s rating of record (or other official performance appraisal or evaluation) is at least “Fully Successful” (or the equivalent level under a different Performance Management and Appraisal Plan) for the last annual rating of record.

The worksite is in a different location (normally defined as 50 miles or more from the worksite of the position held immediately before the move).

The employee must show evidence that a residence in the new location has been established.

A relocation incentive may be offered to an employee, and paid simultaneously while an employee is already receiving a retention incentive, subject to aggregate pay limitations.

Relocation incentives may be paid as an initial lump-sum payment at the beginning of the service period, in installments throughout the service period, as a final lump sum payment upon completion of the service period, or in a combination of these methods.

Factors in Determining the Amount of a Relocation Incentive.

Relocation incentives may not exceed 25 percent of the employee’s annual rate of basic pay in effect at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period, not to exceed 4 years. For example, if an employee is paid 25 percent for 3 years, the total incentive would amount to 75 percent of his or her annual rate of basic pay at the beginning of the service period.

The disparity in cost-of-living between the candidate’s current residence and the proposed duty station, as documented in a Runzheimer International Two Location Comparison, or similar type of cost-of-living comparison.

The personal or professional disruption that will occur as a result of relocation and/or the undesirability of the proposed duty station’s geographic area.

7-8.5 RETENTION INCENTIVE

Retention Incentive. A retention incentive may be paid to a current Federal employee in a position critical to the mission of the organization, if it is determined that the unusually high or unique qualifications of the employee, or a special need of the organization for the employee’s services, makes it essential to retain the employee and that the employee would be likely to leave the Federal service in the absence of a retention incentive. An incentive is also allowable to retain an employee or group of employees when a general or specific notice of closure or relocation has been announced and they are essential to retain for mission requirements and are likely to leave for a different position in the Federal service in the absence of a retention incentive.

Retention incentives may be approved by an AAO. However, the AAO must be one level above the recommending official unless there is no official at a higher level than the recommending official in the IHS Area or Headquarters

Retention incentives may not be authorized for an employee during a period of time already covered by a recruitment or relocation incentive service agreement.

A retention incentive may be paid only when the employee’s rating of record (or other official performance appraisal or evaluation) is “Fully Successful” (or the equivalent level under a different Performance Management Appraisal Plan) for the last annual rating of record.

Retention incentives may be paid in installments after the completion of specified periods of service, or in a single lump sum after completion of the full period of service as required by the service agreement. Retention incentives may not be paid as a single lump sum at the start of a service period or in advance of fulfilling the service period for which the incentive is authorized. (Installment payments must be consistent with biweekly pay periods.)

Note: A written service agreement is not required for retention incentives paid on a biweekly installment payment basis. When no service agreement is required, payment of retention incentives may be reduced or terminated if that payment is no longer warranted due to changes in labor-market factors, organizational need for employee services, budgetary considerations. or other factors.

Excess retention incentive payments that would cause an employee’s total compensation to exceed the applicable aggregate limitation may be deferred and paid in a lump sum payment at the beginning of the following year.

Payment of retention incentives may not be made retroactively, that is, prior to the effective date of the service agreement signed by management officials and the employee.

Factors in Determining the Amount of a Retention Incentive. Retention incentive rates for individuals are expressed as a percentage of the employee’s annual rate of basic pay, not to exceed 25 percent of the annual rate of basic pay.

Retention incentive rates for a group or category are expressed as a percentage, not to exceed 10 percent of the basic pay of each employee in a group or category of employees authorized to receive an incentive.

A competing written non-Federal salary offer (normally not more than 90 days old) may be considered as documentation in determining the amount of an incentive. However, letters inquiring about positions (e.g., headhunter letters) are not employment offers but are part of the search for available candidates.

The individual’s role in the program (e.g., leadership, expert, etc.) and the potential impact of the individual leaving the program. Factors to be reviewed include the following:

The urgency of the public health program, the organization’s mission, or Congressional priority.

The individual’s unusually high or unique qualifications, specialized skills, or training and experience, a cost assessment of previous government-sponsored training, if pertinent.

Other comparable criteria that must be justified in the case.

Although the following factors may also be considered in establishing the amount of the incentive, no individual factor provides sufficient basis alone to justify the amount of the incentive:

The average salary reported in published salary surveys for comparable private sector positions.

The length of service and contribution of the employee while serving in the Agency.

The estimated cost of recruiting, training, and replacing the employee, if he/she were to leave the Federal service.

Whenever a retention incentive is based on the likelihood that an employee who is eligible for retirement is likely to retire if the incentive is not paid, the organization is required to document that recruitment and/or succession planning is underway for the position and that the position is critical to the mission of the organization.

Group Incentives. Recruitment, relocation, and retention incentives may be paid to groups of employees, as follows:

The AAO may target groups of similar positions that have been difficult to fill in the past or that are likely to be difficult to fill in the future and may offer a recruitment incentive on a group basis.

A major organizational unit of IHS is relocated to a different commuting area (i.e., 50 or more miles from the current work site, or less than 50 miles with approval of a waiver) and the approving official determines that relocation incentives are necessary for specified groups of employees to ensure the continued operation of that unit without undue disruption of an activity or function that is deemed essential to the mission and/or without undue disruption of service to the public.

The AAO may pay retention incentives to an eligible group or category of employees if the organization determines that the unusually high or unique qualifications of the group or the organization’s special need for the employees’ services makes it essential to retain the employees and that there is high risk that a significant number of employees in the group would leave the Federal service in the absence of a retention incentive.

Movement among IHS Headquarters, Areas, or Service Units. If an employee voluntarily moves among Headquarters, Areas, or Service Units, the gaining Headquarters, Area, or Service Unit shall reimburse on a pro rata basis the component that paid the incentive.

7-8.6 SERVICE AGREEMENTS

Before paying recruitment, relocation, or retention incentives (and when required), an employee must sign a written service agreement that includes the following:

Contents of a Service Agreement. Service agreements must include the following:

A specified period of employment with the IHS (or successor organization in the event of a transfer of function).

The length of the service period and the criteria for making that determination.

The required service period commencement and termination dates. (Note: An organization may delay a service agreement commencement date for recruitment and relocation incentives until after the employee completes an initial period of formal training or a required probationary period.)

The total incentive amount, the payment method, and the timing and amounts of each incentive installment payment.

Other terms or conditions that, if violated, will result in termination of the service agreement.

A statement that if an employee does not successfully complete the training or probationary period before the service period commences for recruitment and relocation incentives, the organization is not obligated to pay any portion of these incentives to the employee.

The mandatory and discretionary conditions under which the organization terminates the service agreement; the obligations of the IHS Headquarters, Area, Service Unit, and employee if the agreement is terminated; and how termination effects incentives the employee has been paid for completed or uncompleted service, or how termination affects incentives not yet paid to the employee for his or her uncompleted service.

Minimum Length of Time for Service Agreements. The following criteria must be used for all non-biweekly payment amounts when determining the length of service, and percentage of the annual rate of basic pay for all recruitment, relocation or retention incentives with signed written service agreements. (See Manual Exhibit 7-8-A).

Amount of Payment

Length of Service

Up to 16%

6 months

16% to 25%

1 year

26% to 50%

2 year

51% to 75%

3 year

76% to 100%

4 year

Termination of Service Agreement. Service agreements may be terminated by the AAO based on discretionary or mandatory reasons.

Discretionary Termination. An AAO may unilaterally terminate recruitment, relocation, or retention incentive service agreements based on the management needs of the office. Examples of reasons for discretionary termination include reduction in force, insufficient funds, or need to reassign the employee to a position with different terms of employment.

For recruitment and relocation incentives, the employee is entitled to the incentive payments that are attributable to completed service and to retain any portion of an incentive payment the employee received that is attributable to uncompleted service.

For retention incentives, the employee is entitled to retain any retention incentive payments that are attributable to completed service and to receive any portion of a retention incentive payment owed by the organization for the employee’s completed service.

Mandatory Termination. An AAO must terminate a service agreement if an employee is demoted or separated for cause (i.e., for unacceptable performance or conduct), if the employee receives a rating of record lower than “Fully Successful” (or equivalent) during the period of the service agreement; or if the employee otherwise fails to fulfill the terms of the service agreement. An AAO must also terminate:

For recruitment and relocation incentives, the employee will retain any incentive payments that are attributable to completed service and must repay any portion attributable to uncompleted service. The organization is not obligated to pay any outstanding incentive payments attributable to uncompleted service, unless specified in the service agreement.

For retention incentives, the employee will retain any incentive payments that are attributable to completed service; and the organization is not obligated to pay any outstanding incentive payments attributable to uncompleted service unless specified in the service agreement.

Not Grievable or Appealable. The termination of a service agreement is not grievable or appealable.

Notification. The organization must notify an employee, in writing, when it terminates a service agreement.

Reimbursement. If an employee must reimburse the Federal Government for any incentive payments received that are attributable to incomplete service, and the employee fails to reimburse the organization for the excess amount owed, the IHS will take steps to recover amounts owed pursuant to the regulations governing the Department of Health and Human Services debt collection procedures.

Use of Other Discretionary Compensation Options. Whenever incentives are used in conjunction with other forms of discretionary compensation (e.g., superior qualifications appointment, student loan repayment, etc.), the incentive request must address the total compensation proposed for the candidate and describe the rationale for use of multiple pay mechanisms.

7-8.7 DOCUMENTATION, REPORTING, AND MONITORING

Documentation. Each IHS Area Director who approves a determination to pay incentive shall document the decision in sufficient detail to justify the payment and to reconstruct the action. This documentation will be submitted to the servicing Regional Human Resource Office for review for sufficiency, adherence to this policy, and retention in the appropriate file. This documentation shall include a copy of the service agreement, the initial incentive determination, the employee’s rating for the previous performance period, and the following information:

The criteria used to determine the need for paying the incentive (including the need for advance determination) and how the criteria were applied.

The criteria used to determine the amount of the incentive and how the criteria were applied.

The qualifications of the candidate/employee in sufficient detail demonstrate that he/she meets any special qualifications needed for the position.

The length of the service agreement and the criteria used to make that determination.

Upon approval, payment of the incentive shall be documented by preparing an SF-50 and filing it in the employee’s Official Personnel Folder.

Reporting. The DHR will prepare an annual report ensure accountability on the use of the approved incentives. The final report, due by December 15, of each year, shall be cumulative, covering the use of the incentive for the entire calendar year. Each report shall include the following:

The type of incentive;

Title, pay plan, series, and grade;

Total number of employees paid that incentive by title, pay plan, series, and grade;

Total dollar amount paid for that incentive by title, pay plan, series, and grade;

A narrative discussion of the situations for which incentives were used, the effectiveness of the retention incentive authorities, and any recommendations for improving the use of the statutory authorities in terms of both regulatory change and Department requirements and flexibilities.

Monitoring. The DHR must monitor the use of these incentives to ensure their use is consistent with the requirements of the regulations and this chapter.

Penalty. If the IHS does not adhere to the requirements of the regulations and this chapter, its use of the incentive may be revoked or suspended, or its delegation of authority withdrawn.